Honduras sent a reform bill to the National Congress that mandates the splitting of the National Electric Energy Company (ENEE) into independent generation, transmission, and distribution companies, creates a new System and Market Operator (OSM), and redefines the industry's operating rules with the aim of improving the system's financial sustainability, strengthening competition, and creating more attractive conditions for investment.
The proposal modifies key pillars of the current system. In addition to separating the various business units of the state-owned electricity company, it transfers market operations to an independent technical entity, incorporates energy storage into the legislation, and strengthens the regulatory powers of the Electricity Regulatory Commission (CREE).
The scope of the changes has already sparked a heated debate within the country. Former Energy Secretary Erick Tejada described the initiative as an "energy counter-reform" and asserted that "dividing ENEE into three commercial entities is a prelude to privatization." He also questioned the transfer of assets linked to the current electricity operating model.
The reform finds part of its justification in the structural problems facing the system. The decree itself acknowledges that ENEE maintains a deficit in its finances, requiring recurring state support, while technical and non-technical losses continue to exceed standards considered reasonable for the international electricity industry.
Within the new institutional design, one of the most significant changes is the creation of the System and Market Operator (OSM) , the body that will assume the integrated operation of the national interconnected system and the administration of the wholesale market. The entity's responsibilities will include coordinating electricity dispatch, managing energy transactions, carrying out the financial settlement of the market, and guaranteeing the continuity and security of supply under principles of independence and transparency.
The proposal also seeks to strengthen regulatory independence. Future commissioners of the CREE will be selected through public competitions and a nomination process that includes universities, professional associations, business representatives, and energy authorities. Furthermore, the proposal expands obligations regarding institutional transparency and the publication of regulatory and technical information.
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In parallel, the text introduces modifications aimed at deepening competition within the industry. Distributors will be required to purchase capacity and energy through competitive international public tenders , while the expansion of the transmission network will also be subject to bidding processes overseen by the regulator.
Another noteworthy aspect is the formal incorporation of Energy Storage Systems (ESS) into the Honduran legal framework. The initiative recognizes this technology as part of market activities and enables its participation under specific rules, preventing discriminatory treatment compared to other energy sources or resources.
The inclusion of storage responds to an increasingly visible trend in Latin America, where batteries are beginning to play a strategic role in integrating variable renewable generation, providing operational flexibility and improving the reliability of electrical systems.
Tejada denounces a "counter-reform" and warns about privatization
The former Energy Secretary's criticisms are primarily directed at the reorganization of ENEE. Through his social media accounts, Tejada maintained that dividing the public company into commercial entities represents "the prelude to privatization" and warned about the transfer of assets linked to the National Dispatch Center.
However, the text of the decree stipulates that the new generation, transmission, and distribution companies will remain under state ownership through a parent company structure headed by ENEE itself. The regulations also provide that the state-owned company will retain share ownership of any subsidiaries created after the reorganization process.
The discussion also comes at a particularly sensitive time for Honduras. In recent years, the country has lost ground in attracting renewable energy investment to markets like Guatemala and Panama, which have made progress with more frequent contracting processes, more stable regulatory signals, and mechanisms aimed at reducing risk for developers.
In that context, many of the proposed changes seek to bring the functioning of the Honduran market closer to schemes implemented in other countries in the region, with a clearer separation between regulation, operation and commercial activities, as well as greater incentives for the incorporation of private capital and new technologies.
The discussion is not merely about an administrative reorganization of ENEE. The proposal redefines who regulates, who operates, and who participates in the Honduran electricity market. Its approval would mark the beginning of a new era for the sector, with direct effects on future tenders, renewable energy investments, energy storage, and infrastructure expansion in the coming years.